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Is Chipotle Adding Pizza to Its Menu?

Chipotle Mexican Grill invests in a pizza chain.

Chipotle Mexican Grill(NYSE:CMG) is hoping to make some dough in the pizza business.

The darling of fast casual revealed yesterday that it's a financial backer of Pizzeria Locale, a pizza chain that's trying to put a fast-casual spin on Italian food.

Teaming up with a pair of area restaurateurs that rolled out Pizzeria Locale as a full-service eatery in Boulder two years ago, the Chipotle-funded tweak gives pizza a Chipotle-like spin. Customers approach the assembly-line counter just as they do at Chipotle and at the smaller ShopHouse, customizing their meals.

Pizzeria's 11-inch pies are then heated up in turbo ovens that bake the pies in all of two minutes. It's naturally not as speedy as Chipotle (or ShopHouse) given the subsequent baking, but it's not as if things take that much longer than that when someone orders the off-menu quesadilla.

We don't know the extent of Chipotle's financial commitment here. Investors are simply told that expansion will be slow and tactful, just as it has been calculated in building out its Asian fast-casual concept, ShopHouse.

"While both Pizzeria Locale and ShopHouse are exciting concepts, it's important to remember that our growth will continue to be driven for the foreseeable future by expanding the Chipotle brand within the U.S.," Chipotle founder and CEO Steve Ells revealed in Wednesday's press release.

In other words, don't expect pizza to move the needle. As exciting as it may seem to see Chipotle give ethnic cuisine another shot, this will continue to be a company that relies on the popularity of its Mexican eats for several more years before Asian and Italian become material contributors.

That's fine. Chipotle isn't in a hurry. Analysts see revenue growing 17% this year and again in 2014. Nearly all of that growth is coming from its burrito-rolling empire. Between its envious streak of positive comps and a healthy expansion schedule, there is plenty of room for the namesake chain to run. But you can never be too confident. You don't want all of your burritos in the same basket. It will take several years before Chipotle needs ShopHouse or Pizzeria Locale to pad or sustain its growth, but it's always comforting to know that the premium-priced investment is already holding two aces up its sleeve.

Author

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time with more than 20,000 bylines over those 22 years. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he splits his time living in Miami, Florida and Celebration, Florida.
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